Will increase of foreclosures help housing market?

Published: Thursday, February 14, 2013 at 1:00 a.m.

Last Modified: Wednesday, February 13, 2013 at 8:31 p.m.

Home defaults across Southwest Florida continued their winter increase in January, as delinquent borrowers brought new hope to a prolonged real estate shortage that many fear could stall the housing recovery.

Although foreclosure activity remains well below levels from a year ago, total filings in the Manatee, Sarasota and Charlotte counties rose 5 percent from December, keeping pace with a statewide trend that has seen lenders ramp up their eviction efforts since early summer.

To be sure, the increased filings come as bad news for homeowners who have been fighting to keep their property. But in a strange twist, this new wave of defaults -- once a thorn for the economy -- is now welcomed by real estate agents clamoring for new listings to meet demand for spring's busy buying season.

"We're not seeing a huge flood of foreclosures, but a strong flow is beginning to hit the market, and the demand is there for these properties," said Peter Crowley, broker and co-owner of Re/Max Alliance Group in Sarasota and Manatee. "It's going to take some time before we actually see all of these."

There were 1,330 total foreclosure filings reported in January between Sarasota, Manatee and Charlotte counties, according to data released Wednesday by RealtyTrac Inc. That was up from 1,268 defaults during December but still down nearly 18 percent from the same time last year.

Manatee led the way with a 68 percent jump in home defaults during January, with 463 total foreclosures recorded. Sarasota's 558 filings represented a 15 percent decline from December, while the 309 in Charlotte was a drop of 7 percent.

The area's cumulative increase comes one month after foreclosures posted their first annual increase since the housing crisis first gripped the region during 2009. Total filings were up 30 percent last year.

Most industry analysts expect foreclosures to keep rising as banks resume cases that were put on hold because of fraud issues in 2011. That slowed the entire process for two years. But the $25 billion mortgage settlement inked last spring cleared the way for banks to catch up on those backlogs.

Other boom-time buyers, who owe drastically more on a mortgage than their property now is worth, also are now seeking default as a strategic way out.

Foreclosure filings up

Nearly 43 percent of the foreclosures reported in Southwest Florida last month were lis pendens filings, when lenders first tell delinquent borrowers they intend to foreclose, RealtyTrac said. The rise in early stage filings are a sign of increased processing activity.

With it taking an average of three years to process foreclosures in Florida, judicial circuits across the state are swamped, said Sean Snaith, a University of Central Florida economist.

Inconsistent job growth has not helped matters, Snaith said.

"The high (foreclosure) rates are a function of the judicial process and bottleneck in the courts," Snaith said.

"You have homes that sit in the process a very long time, and we still have a lot of those to work through."

The new wave of foreclosures will continue to drag on Sarasota median home prices, which nonetheless appreciated $29,500 in the past year.

But the phenomenon could spell relief for a regional housing market that is operating with only a four-month supply of homes to sell at the busiest time of the year, with snowbirds and spring tourists in town through Easter.

Scheduled foreclosure auctions in Florida passed a 12-month high in Florida last month, which means there are more opportunities on the horizon for buyers hunting for a bargain.

Some housing analysts remain wary.

Even if those new bank-owned properties come on the market in time, most have sat vacant for months, were not maintained for years and require too much sweat equity for the typical buyer.

They suspect the uptick in foreclosures will instead feed institutional investors' appetite for rental properties.

"The truth of the matter is, most of the foreclosure transactions are done through online auctions or directly between the bank and investor," said Jack McCabe, a real estate consultant in Deerfield Beach. "This is not going to help the inventory situation much."

Still foreclosure king

Florida continued to hold the title of foreclosure king in January, with the most filings of any state and the nation's highest rate of default for the fifth month in a row.

Even California, with nearly double the population and its own economic struggles, had fewer total foreclosures than Florida. That has not happened since before the Great Recession.

One in every 300 Florida housing units had a default filing in January -- more than twice the national average. There were 29,800 foreclosures, up 12 percent from December and up 20 percent from January 2012, RealtyTrac reported.

Ocala, about 150 miles north of Sarasota, posted the nation's highest foreclosure rate during January among metro areas with a population of 200,000 or more.

Five other Florida metros had foreclosure rates in the top 10, including Miami, Orlando, Jacksonville, Tampa and Lakeland.

Nationwide, there were 150,864 filings during January, a decrease of 7 percent from the previous month and a drop of 28 percent from a year ago.

"These numbers are starting to spike because lenders are moving foreclosures again in states like New York, New Jersey and Florida," RealtyTrac vice president Daren Blomquist said Wednesday.

"Florida is the prime example because it was among the states hardest hit. It will just take some time to catch up with these delayed foreclosures."

<p>Home defaults across Southwest Florida continued their winter increase in January, as delinquent borrowers brought new hope to a prolonged real estate shortage that many fear could stall the housing recovery.</p><p>Although foreclosure activity remains well below levels from a year ago, total filings in the Manatee, Sarasota and Charlotte counties rose 5 percent from December, keeping pace with a statewide trend that has seen lenders ramp up their eviction efforts since early summer.</p><p>To be sure, the increased filings come as bad news for homeowners who have been fighting to keep their property. But in a strange twist, this new wave of defaults -- once a thorn for the economy -- is now welcomed by real estate agents clamoring for new listings to meet demand for spring's busy buying season.</p><p>"We're not seeing a huge flood of foreclosures, but a strong flow is beginning to hit the market, and the demand is there for these properties," said Peter Crowley, broker and co-owner of Re/Max Alliance Group in Sarasota and Manatee. "It's going to take some time before we actually see all of these."</p><p>There were 1,330 total foreclosure filings reported in January between Sarasota, Manatee and Charlotte counties, according to data released Wednesday by RealtyTrac Inc. That was up from 1,268 defaults during December but still down nearly 18 percent from the same time last year.</p><p>Manatee led the way with a 68 percent jump in home defaults during January, with 463 total foreclosures recorded. Sarasota's 558 filings represented a 15 percent decline from December, while the 309 in Charlotte was a drop of 7 percent.</p><p>The area's cumulative increase comes one month after foreclosures posted their first annual increase since the housing crisis first gripped the region during 2009. Total filings were up 30 percent last year.</p><p>Most industry analysts expect foreclosures to keep rising as banks resume cases that were put on hold because of fraud issues in 2011. That slowed the entire process for two years. But the $25 billion mortgage settlement inked last spring cleared the way for banks to catch up on those backlogs.</p><p>Other boom-time buyers, who owe drastically more on a mortgage than their property now is worth, also are now seeking default as a strategic way out.</p><p><b>Foreclosure filings up</p><p></b></p><p>Nearly 43 percent of the foreclosures reported in Southwest Florida last month were lis pendens filings, when lenders first tell delinquent borrowers they intend to foreclose, RealtyTrac said. The rise in early stage filings are a sign of increased processing activity.</p><p>With it taking an average of three years to process foreclosures in Florida, judicial circuits across the state are swamped, said Sean Snaith, a University of Central Florida economist.</p><p>Inconsistent job growth has not helped matters, Snaith said.</p><p>"The high (foreclosure) rates are a function of the judicial process and bottleneck in the courts," Snaith said.</p><p>"You have homes that sit in the process a very long time, and we still have a lot of those to work through."</p><p>The new wave of foreclosures will continue to drag on Sarasota median home prices, which nonetheless appreciated $29,500 in the past year.</p><p>But the phenomenon could spell relief for a regional housing market that is operating with only a four-month supply of homes to sell at the busiest time of the year, with snowbirds and spring tourists in town through Easter.</p><p>Scheduled foreclosure auctions in Florida passed a 12-month high in Florida last month, which means there are more opportunities on the horizon for buyers hunting for a bargain.</p><p>Some housing analysts remain wary.</p><p>Even if those new bank-owned properties come on the market in time, most have sat vacant for months, were not maintained for years and require too much sweat equity for the typical buyer.</p><p>They suspect the uptick in foreclosures will instead feed institutional investors' appetite for rental properties.</p><p>"The truth of the matter is, most of the foreclosure transactions are done through online auctions or directly between the bank and investor," said Jack McCabe, a real estate consultant in Deerfield Beach. "This is not going to help the inventory situation much."</p><p><b>Still foreclosure king</p><p></b></p><p>Florida continued to hold the title of foreclosure king in January, with the most filings of any state and the nation's highest rate of default for the fifth month in a row.</p><p>Even California, with nearly double the population and its own economic struggles, had fewer total foreclosures than Florida. That has not happened since before the Great Recession.</p><p>One in every 300 Florida housing units had a default filing in January -- more than twice the national average. There were 29,800 foreclosures, up 12 percent from December and up 20 percent from January 2012, RealtyTrac reported.</p><p>Ocala, about 150 miles north of Sarasota, posted the nation's highest foreclosure rate during January among metro areas with a population of 200,000 or more.</p><p>Five other Florida metros had foreclosure rates in the top 10, including Miami, Orlando, Jacksonville, Tampa and Lakeland.</p><p>Nationwide, there were 150,864 filings during January, a decrease of 7 percent from the previous month and a drop of 28 percent from a year ago.</p><p>"These numbers are starting to spike because lenders are moving foreclosures again in states like New York, New Jersey and Florida," RealtyTrac vice president Daren Blomquist said Wednesday.</p><p>"Florida is the prime example because it was among the states hardest hit. It will just take some time to catch up with these delayed foreclosures."</p>